Even if the GOP Senate tax bill passes, it’s far from over, and the GOP may be screwed sideways in getting a reconciled bill that can pass. That’s because how Senators and Congressmen get reelected is radically different.
The issue that is going to put the two sides into irreconcilable differences are the the state and local tax deductions.The Senate wants to completely phase them out over time. They can do this for one simple reason. The state and local tax deduction most benefits residents of states that have high state and local taxes, in other words Democratic leaning states. States like New York, New Jersey, California and Connecticut tend to be Democratic strongholds, so the GOP Senate can screw those Senators by taking away tax deductions for their constituents. This is actually shortsighted, since it makes it harder for a Republican challenger to run when his party blew up the tax deduction, but revenge is more important.
But while the GOP Senate may be willing to punish Blue states with high state and local taxes, it id a death knell for the GOP House majority. Even blue states with two Democratic Senators have conservative pockets that elect Republican representatives. If the Senate deep sixes the state and local tax deductions, it will make it much more difficult, if not impossible for those GOP reps to get reelected..
This issue is going to be incredibly difficult for the GOP to resolve in committee, simply because the two sides both want diametrically opposite things. The GOP Senate wants to punish Democratic states, and the GOP House wants to get reelected to red seats in blue states with high taxes. The funny thing is that repealing the Individual Mandate of the ACA in the Senate bill will be trouble too, since there are plenty of GOP incumbents in seats where the ACA us possible and Hillary carried the district in 2016. But the simple fact is that the Republicans have to have these two things in some acceptable format. The reason is that they must come up with some way to save mo ey to offset the deficits that the tax cuts will bring. If they can’t scrounge enough money from repealing the individual mandate, and collecting more taxes by cancelling the state and local tax deduction, they can’t keep the deficit under that pesky $1.5 trillion cap that would kibosh passing the bill with 51 votes.
And this dispute must be satisfactorily resolved in conference, because there are no do overs. Whatever bill that comes out of committee must be voted on as it is. A straight up and down vote, but with no additions or subtractions. The House only passed their bill with a lax state and local tax deduction by a couple of votes, and they didn’t lose the GOP incumbents in blue states that they would if the Senate has their way with the state deductions. The loss of the deficit trigger is already going to make it harder for deficit hawks like Jeff Flake and Bob Corker to vote for the bill, especially since they no longer give a shit what McConnell and Trump think or want. If too much savings are lost due to delaying or eliminating the Individual Mandate kill, or a loosening of state and local deductions in conference, they may lose enough deficit hawks to kill it. Either way, it’s going to be a mess.
No matter how you slice it, if the Senate tax bill passes, intertwining the two widely disparate bills in conference committee is going to take the use of a surgical micro scalpel. A nd we’re talking about a GOP caucus that for the last 8 years has swung a hand with a Freddie Krueger glove with butcher knives hanging from each finger. What could go wrong?